Q8. Consider the following assets which have rates of return in three equally likely scenarios:

	Bad	Okay	Good
Market M	-5%	5%	15%
Asset X	-2%	-3%	25%
Asset Y	-4%	-6%	30%

a) Compute the market betas for assets X and Y.

b) Compute the correlations of X and Y with M.

c) Assume you were holding only M. You now are selling off 10% of your M portfolio to replace it with 10% of either X or Y. Would an M&X portfolio or an M&Y portfolio be riskier (In doing so, find a market beta for each portfolio)?